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Frequently Asked Questions

What is a cost segregation study?
A cost segregation study is a tax savings strategy that allows property owners to accelerate depreciation deductions, reducing taxes and increasing cash flow.
It involves analyzing property assets and reclassifying them into shorter depreciation time frames (5, 7, or 15 years) rather than the standard 27.5 or 39 years, allowing for accelerated depreciation deductions.
Property owners of rental properties, commercial real estate, owner-occupied real estate, new builds, or real estate that has had renovations exceeding $450,000 can significantly benefit, as well as real estate professionals who have purchased, constructed, or renovated property in the last 15 years.
Almost any type of real estate property, including office buildings, retail spaces, industrial sites, residential rentals, and special-purpose buildings like hotels or restaurants.
Yes, tenants can also benefit from cost segregation studies through improvements made to leased commercial property.
Cost Segregation is great for new projects, purchased projects, renovation projects, retroactive applications, leasehold improvements, reconstruct projects, and pre-owned properties.
Straight-line depreciation spreads the cost evenly over 27.5 (residential) or 39 years (commercial), whereas cost segregation accelerates deductions into the early years of property ownership.
While technically possible, the complexity and need for detailed knowledge of tax codes and engineering principles make it advisable to hire specialists like Seneca Cost Segregation.
Look for providers with extensive experience, a strong track record, strong protections, people you can trust, and expertise in both tax law and the technical aspects of your property type.
What if the cost segregation study doesn’t find any savings?
Seneca Cost Segregation does a no-money upfront estimation and free proposal of the property to determine estimated savings before you put any money down.
100%. Past depreciation on acquisitions, construction, or renovations can be reclaimed through a cost segregation study without amending previous tax returns. Immediate “catch-up” depreciation is possible by submitting Form 3115. Typically, conducting a study within five years of property purchase or renovation is beneficial, but consult your Tax Advisor and Cost Segregation specialist for personalized advice.
Ideally, in the year the property is constructed, purchased, or renovated to maximize tax benefits, although it can also be applied retroactively.
Tax savings should far exceed the cost many times over. Fees are determined by various factors such as square footage, type of property, and level of complexity. Seneca Cost Segregation is committed to offering cost-effective pricing for every property and provides a no-money-down proposal for free before a study is done.
The duration of a cost segregation study varies with the property’s complexity, and how quickly details are received from you or your accountant, but most are completed within 2-4 weeks. Seneca Cost Segregation can also prioritize studies if you need to meet a deadline.
Not at all. By completing an estimate, you’ll know how much tax you will owe / not owe and can leverage your cash now to invest in cash-flowing properties or investments back into your business.
Can my CPA do the cost seg for me?

Although your CPA is highly skilled in their field, cost segregation is a specialized area that demands the expertise of qualified engineers and specific knowledge in applying their findings to generate a high-quality study. Such a study not only yields optimal results but also withstands IRS scrutiny. Typically, accountants partner with a firm that specializes in cost segregation, such as Seneca Cost Segregation.

If you like analogies: like your primary care doctor, they will refer you out to a specialist if you need specialized help. We’re the Robin to your CPA being Batman.

We have worked with thousands of CPAs, acknowledging the crucial role they play in understanding a client’s tax scenario comprehensively. We engage closely with your accountant when needed to ensure alignment and share a draft of the completed study with both you and your accountant for review. This step is taken before we finalize the study and before it is incorporated into your tax return, ensuring accuracy and satisfaction.

Cost Segregation is a fully IRS-sanctioned strategy for depreciating investment real estate, offering you peace of mind and reliability. When a reputable and qualified firm adheres to the IRS Cost Segregation Audit Technique Guide, there is no additional risk of an audit. Moreover, on the extremely rare occasion that an audit occurs, our cost segregation studies have always been confirmed with no changes required, underscoring our commitment to precision and compliance.

IRS Cost Segregation Audit Technique Guide: https://www.irs.gov/pub/irs-pdf/p5653.pdf

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